ews wrap
JLL Expands Platform With
$613M Acquisition of Staubach
Grubb CEO Exits,
Dividends Halted
After much industry speculation,
Chicago-based Jones Lang LaSalle
has folded Staubach Co. of Dallas
into its operations at a cost of $613
million. The deal was finalized mid-month, less than 30 days after the
agreement was announced.
“Merging our businesses builds our
position in key US markets and
strengthens our corporate services
business by introducing Staubach
clients to our global corporate solutions capabilities,”
Colin Dyer, CEO of
JLL, said in a statement
announcing the deal.
ate analyst at the New York City-based ratings agency.
However, Bisono cautions that trans-action-based revenue, which will
increase from 56% to 61% as of year-end 2007, is a volatile source of cash
flow. “But that’s mitigated, to an extent,
by the nature of the tenant representation segment because of the requirement for tenants to renew leases, which
means more repeat business.”
Moody’s is also concerned with the
transaction’s strain on JLL’s credit
metrics as the acquisition is over 80%
debt financed. But it credits the firm
with having a proven track record of
COLIN DYER, JONES LANG LASALLE
The merger “builds our position in
key US markets and strengthens
our corporate services business.”
Under the terms of the transaction,
JLL paid out $123 million in cash and
$100 million in stock when the deal
closed. The balance, some $390 million,
is to be paid out in cash over five years
for all outstanding capital stock of
Staubach Holdings Inc. The agreement
also calls for potential earn-out payments of up to $114 million, subject to
the achievement of certain performance
hurdles. Not included in the merger are
Staubach Retail Services or Cypress, the
company’s investment development
business, both of which will continue to
operate under license agreements.
Analysts at Moody’s Investors
Service have given the merger the
thumbs up, affirming the rating of JLL
with a stable outlook. “Having additional diversity in the US and in other
segments, such as tenant representation, that provides more stable cash
flow for Jones Lang LaSalle is important,” says Griselda Bisono, an associ-
quickly paying down acquisition debt
and anticipates that JLL will prudently manage its leverage. The Staubach
buy is said to be the largest in the
company’s history.
According to JLL, “substantially
all” of Staubach’s employees, including those in its executive ranks, will
make the transition to the newly combined firm. Roger Staubach will join
the board of directors and serve in the
new role of executive chairman,
Americas. Staubach CEO Greg
O’Brien will become JLL’s CEO of
brokerage, Americas, while John
Gates, Staubach’s president and
COO, will serve as president of brokerage, Americas.
Combined, the firm will have 33,700
employees around the world and
11,500 in the Americas. The transaction also will give JLL 14 new corporate offices, bringing the total to 184
globally.—Danielle Douglas
Some seven months after its much-her-alded merger with NNN Realty
Advisors, the reconstituted Grubb &
Ellis Co. has been beset by top-level
executive resignations and charges by
its former chairman of mismanagement.
The Santa Ana, CA-based firm has
been rocked in recent weeks by a series
of major C-suite shakeups, including
the resignations of Scott D. Peters as
CEO, president and director, and
Robert H. Osbrink, its EVP and chairman of transaction services. Peters will
continue as chairman and CEO of
Grubb & Ellis Healthcare REIT and
EVP of Grubb & Ellis Apartment
REIT, while independent board of
director member Gary H. Hunt has
been named interim CEO as the company searches for a new chief executive. A Grubb spokesperson told
GlobeSt.com that Osbrink’s position will
not be filled.
On the same day Peters’ resignation
was disclosed—July 11—the company
suspended its dividend and revealed a
$25-million share repurchase initiative.
In an interview with GlobeSt.com, Hunt
maintains that Peters wasn’t forced out,
but made the decision to step down on
his own. Hunt also takes exception to
reports that executive shakeups are
under way at Grubb. “It’s a mischarac-terization to say that there’s been a lot of
changes going on,” he says.
Meanwhile in late June, Anthony W.
Thompson, Grubb’s former chairman
and its second largest shareholder, filed
a 13D/A document with the SEC to
regain his position on the board. In the
filing, Thompson, who was the founder
and chairman of NNN Realty Advisors
prior to the merger, said in the months
since his departure from Grubb, the
company “has announced poor results,
been wracked by management turnover
and suffered an expensive and embarrassing setback when the special purpose acquisition vehicle that it sponsored unceremoniously failed.
Accordingly, in order to preserve and
